Amazon's India strategy: Focus on every geography to be 'everything for everyone’

Amazon said it would continue to focus on every geographic segment of India’s online retail market just days after Flipkart earmarked the country’s vast rural hinterland and smaller cities as its future growth markets.Rasul Bailay | ET Bureau | March 22, 2017, 08:03 IST

Global e-commerce giant Amazon said it would continue to focus on every geographic segment of India’s online retail market just days after homegrown rival Flipkart earmarked the country’s vast rural hinterland and smaller cities as its future growth markets.

“Our ambition in India is to become everything for everyone,” said Amit Agarwal, head of Amazon in India. “We don’t think that way (whether the time has come in India’s ecommerce market to target particular segments of customers). We believe customers, wherever they are in India, should be able to buy and get products delivered to them.”

ET had reported last week that Bengaluru-based Flipkart witnessed a spike in orders from Tier II cities in the second half of 2016, with that segment currently accounting for about two-thirds of total sales.

The online retailer had also said the company would ramp up its network of delivery hubs to service the increasing number of orders from smaller towns.

“Ecommerce is no more a large city phenomenon: Our strategy is focused on middle India,” Nitin Seth, chief operating officer at Flipkart had told ET. Seth estimates that around 65% of new customers who shopped on the platform, after the end of its mega annual sale in October, are from non-metro areas.

Flipkart and Amazon, the two largest ecommerce players in the country, are running neck and neck in the South Asian nation’s promising online retailing market that is expected to swell to $103 billion by 2019-20 from $26 billion at present, according to Goldman Sachs. In the crucial Diwali sales during October, Flipkart announced that it had sold 15.5 million units, compared with Amazon’s 15 million units.

Many ecommerce executives say that now time has come for India’s e-commerce companies to target specific segments of buyers instead of trying to be everything to everyone. Agarwal of Amazon disagrees.

“The differentiator is about how you deliver the customers’ needs and not in trying to create formats,” he said in an interview in New Delhi on Saturday. “Amazon does that globally and we have been successfully doing that, and India is no different.”

“We want customers to be able to find, discover and buy anything online and any seller to sell anything online that is compliant and legal. If a washing machine breaks down and you are missing a part, you should be able to find it on Amazon and if you want to replace the whole washing machine, you should find that as well,” he said. “We are not a part store or washing machine store but we are the biggest selection.”

Amazon sells more than 100 million products — books, electronics, grocery, fashion and lifestyle, and dozens of other categories — and the US behemoth says that over 50% of its orders come from Tier II and Tier III cities.